Hong Kong’s Insurance Authority (IA) has welcomed the move institutionalising preferential treatment for Hong Kong insurance industry in mainland China’s Solvency Regulatory Rules II for Insurance Companies.
The IA said that the preferential treatment has been operating smoothly since its introduction in 2018. The preferential treatment gives lower capital requirements for Mainland insurers when they cede businesses to eligible Hong Kong professional reinsurers. The rules also prescribe the capital requirement for Mainland insurance institutions issuing catastrophe bonds in Hong Kong. The agreement, which was supposed to last for one year, was extended annually.
The China Banking and Insurance Regulatory Commission (CBIRC) said these measures have aided China’s national opening-up policy and strengthened the mutual trust in supervisory work between the Mainland and Hong Kong, which are conducive to better risk management of the industry and enhancing stable development for both markets.
The IA said that the CBIRC’s decision reflects the importance of Hong Kong’s position as a global risk management centre under the “dual circulation” economic strategy. The move also recognises Hong Kong’s contribution to the development of the Greater Bay Area and the Belt and Road Initiative.
